THE  REFUNDING  OF  A  PQFvTION  OF  THE 
NATIONAL  DEBT. 


SPEECH 


OF 


HON.  MARK  H.  BUNNELL, 

OF  MINNESOTA, 


IN  THE 


HOUSE  OF  REPRESENTATIVES, 


Saturday,  Maech  20,  1880. 


WASHINGTON. 
1880. 


Avery  Architectural  and  Fine  Arts  Library 
Gift  of  Seymour  B.  Durst  Old  York  Library 


SPEECH 

07 

HON.  MARK  H.  DUNNELL. 


The  House  being  in  Committee  of  the  "Whole,  and  having  under  consideration 
the  bill  (H.  R.  No.  4592)  to  facilitate  the  refunding  of  the  national  debt — 

Mr.  DUNNELL  said : 

The  Secretary  of  the  Treasury,  in  his  annual  report  in  December 
last,  called  the  attention  of  Congress  to  the  fact  that  certain  bonds 
of  the  Government  would  become  payable  upon  the  demand  of  the 
holders,  December  31,  1880,  and  that  certain  other  bonds  would  bo 
redeemable  at  different  dates  in  1881.  Those  which  are  so  payable 
in  1880  amount  to  $lb,415,0u0.  The  Secretary  said  that  these  bonds, 
the  loan  of  February  8,  1861,  maturing  December  31,  1880,  can  pro- 
bably be  provided  for  from  the  surplus  revenues.  Bonds  to  the  amount 
of  $±82,605,550,  authorized  by  acts  of  July  17  and  August  5, 1861,  are 
redeemable  June  30,  1881,  and  bonds  to  the  amount  of  $71,787,000, 
authorized  by  act  of  March  3,  1863,  are  redeemable  June  30,  1881. 
Also,  bonds  to  the  amount  of  $823,800,  authorized  by  act  of  March 
2, 1861,  are  redeemable  July  1, 1881.  All  the  above  bonds  amount  in 
the  aggregate  to  $273,631,350,  and  bear  an  interest  of  6  per  cent. 

In  addition  to  the  foregoing  securities,  there  will  be  redeemable  May 
1, 1881,5  per  cent,  bonds  to  the  amount  of  $508,440,350.  These  last 
were  authorized  by  acts  of  July  14,  1870,  and  Jauuary  20,  1871.  The 
total  of  these  bonds,  being  all  the  6  and  5  per  cent,  bonds  of  the  Gov- 
ernment now  unpaid,  is  $782,071,700.  Taking  from  this  sum  the 
$18,415,000  which  are  to  be  provided  for  from  the  surplus  revenues, 
there  remain  $763,656,700  to  be  taken  care  of.  either  by  payment  in 
whole  or  in  part  or  some  process  of  refunding. 

The  Committee  on  Ways  and  Means  have  been  charged  with  the 
duty  of  preparing  for  the  consideration  of  the  House  a  bill  providing 
for  refunding  these  maturing  bonds.  Every  patriot  in  the  country 
would  rejoice  if  we  had  the  money  with  which  to  redeem  these  obli- 
gations of  the  Government  and  so  relieve  the  people  from  their  pres- 
ent taxation.  As  this  beneficent  result  cannot  now  be  attained,  it 
certainly  will  be  deemed  wise  to  refund  them  on  the  most  favorable 
terms  possible,  or  such  a  portion  of  them  as  cannot  be  met  by  the 
surplus  revenues  of  the  Government  prior  to  the  dates  when  the  bonds 
are  redeemable.  If  these  bonds  could  be  paid  within  two,  three,  or 
even  four  years  by  the  revenues,  it  would  be  far  better  to  continue  to 
pay  the  6  and  5  per  cent,  interest  on  them  than  refund  for  a  long  time 
at  4  or  34-  per  cent.  It  is  unreasonable,  however,  to  suppose  that  even 
one-half  of  this  amount  could  be  paid  iu  the  longest  time  named. 


4 


Before  alluding  to  the  bill  under  consideration  it  may  be  proper,  in 
this  place,  to  give  the  suggestions  of  the  Secretary  of  the  Treasury, 
made  in  his  last  report.    He  said: 

It  is  respectfully  suggested  that  authority  be  given  at  the  present  session  of 
Congress  to  issue,  sell,  and  dispose  of.  at  not  less  than  par  in  coin,  4  per  cent,  bonds 
of  the  description  set  forth  in  the  said  act  of  July  14,  1870,  and  refunding  certifi- 
cates of  the  description  set  forth  in  the  act  of  February  26,  1679,  with  like  quali- 
ties, privileges,  and  exemptions,  except  as  hereinafter  stated,  to  the  extent  neces- 
sary to  redeem  the  bonds  falling  due  on  or  before  July  1,  1881,  above  described, 
and  to  use  the  proceeds  for  that  purpose. 

It  is  hoped  that  the  advancing  credit  of  the  country  will  enable  the  Secretary  to 
sell  such  bonds  and  certificates  at  a  premium,  but  it  "seems  better  to  maintain'the 
general  conditions  of  the  4  per  cent,  bonds  rather  than  to  undertake  to  sell  a  bond 
at  lower  interest.  The  4  per  cent,  cousol  is  now  universally  known.  The  rate  of 
interest  is  as  low  as  will  generally  maintain  the  bond  at  pai\  and  the  premium  will 
measure  its  advance  above  par  at  favorable  periods.  The  certificates  should  bear 
the  same  rate  and  be  sold  on  the  same  terms  as  the  bonds.  It  is  important  that 
the  authoiity  granted  should  include  the  power  to  refund,  from  the  passage  of  the 
act  at  the  present  session,  and  to  prepay  the  excess  of  interest  on  the  bond  to  be 
refunded  prior  to  its  maturity.  The  present  is  believed  to  be  an  exceptionally  favor- 
able time  for  such  refunding. 

These  suggestions  are  : 

First.  That  the  bonds  and  certificates  to  be  issued  are  to  be  four 
per  cents. 

Second.  That  the  Secretary  be  authorized  to  sell  the  bonds  and  cer- 
tificates and  with  the  proceeds  purchase  the  maturing  bonds  or  pay 
them  at  maturity. 

The  Secretary  j  in  his  conference  with  the  Committee  on  Ways  and 
Means,  modified  the  second  suggestion  above,  drawn  from  his  annual 
report,  for  he  said  in  reference  to  the  sale  of  bonds  for  money : 

It  will  not  be  wise  for  us  to  sell  them  for  the  money  with  the  uncertainty  as  to 
our  being  able  to  use  that  money  in  buying  an  equal  amount  of  outstanding  bonds 
not  yet  matured  ;  and  if  you  we're  to  authorize  that,  we  should  necessarily  have  to 
increase  the  public  debt.   "We  might  not  be  able  to  use  the  money. 

The  committee  after  mature  deliberation  decided  to  report  the  bill 
now  under  discussion.    It  provides  : 

First.  That  the  Secretary  of  the  Treasury  may  issue  bonds  to  the 
amount  of  $500,000,000,  which  shall  bear  interest  at  the  rate  of  3^  per 
cent,  per  annum,  redeemable  at  the  pleasure  of  the  United  States 
after  twenty  vears,  and  payable  fifty  years  from  date  of  issue. 

Second,  that  he  may  also  issue  note's  in  the  amount  of  $200,000,000, 
bearing  interest  at  the  rate  of  3|  per  cent,  rrer  annum,  redeemable  at 
the  pleasure  of  the  United  States  after  two  years,  and  payable  in  ten 
years  from  the  date  of  issue  ;  but  not  more* than  $40,000,000  of  said 
notes  shall  be  redeemed  in  any  one  fiscal  year. 

Third.  That  he  may  issue  certificates  of  deposit  to  an  amount  not 
exceeding  $50,000,000,  fixing  the  rate  of  interest  to  be  allowed  thereon 
at  3^  per  cent,  per  annum  for  one  year,  after  which  interest  shall 
cease  ;  and  the  said  certificates  shall  be  convertible  at  the  option  of 
the  holder,  when  presented  in  sums  of  $50  or  multiples  thereof,  into 
the  coupon  or  registered  bonds  authorized  by  this  act. 

By  these  three  provisions,  the  Secretary  may  issue  bonds  and  certifi- 
cates to  the  amount  of  seven  hundred  and  fifty  millions.  The  bonds, 
as  already  stated,  maturing  in  1680  and  1881  amount  to  $782,071,700,  and 
for  the  conversion  of  which  into  securities  bearing  a  lower  rate  of  inter- 
est, this  bill  is  now  before  us.  The  annual  interest  now  paid  upon  the 
$782,071,700  is  $41,839,898.  The  annual  interest  which  these  new  bonds 
will  call  for,  will  be  $26,250,000.  The  annual  interest  which  will  be 
saved  by  the  operation  of  this  bill  will  be  $15,589,898.  Assuming  that 
the  surplus  revenues  will  wholly  absorb  the  difference  between  the 


5 


$78kD71,700  of  the  bonds  to  be  met  and  the  $750,000,000  herein  pro- 
vided for,  the  annual  interest  charge  after  this  exchange  of  the  3£  per 
cent,  bonds  and  certificates  for  the  5  and  6  per  cent,  bonds  has  been 
consummated  will  be  but  $68,183,881  over  against  the  annual  interest 
charge  August  31,  18(35,  of  $150,977,017. 

Here  will  be  a  reduction  in  the  annual  interest  charge  since  Sep- 
tember 1,  lb05,  of  $82,793,736.  These  figures  will  rind  a  place  in  our 
financial  statements,  if  this  bill  shall  pass  and  be  executed.  The  in- 
terest-bearing debt  will  be  $1,705,577,000,  instead  of  $2,381,530,294  as 
it  was  August  31,  1805.  The  thoughtful  patriot  will  rejoice  over  this 
result. 

A  national  debt  is  not  a  blessing.  To  a  republican  government  it 
is  an  abiding  curse.  Indeed  it  is  a  curse  to  any  government.  No 
party  or  administration,  as  I  believe,  will  have  an  indorsement  of  the 
American  people  which  does  not  seek  some  annual  reduction  in  this 
debt.  This  reduction,  however,  must  not  come,  except  in  pursuance 
of  policies  and  methods  absolutely  honest. 

We  are  now,  as  a  government,  reaping  a  rich  reward,  because  its 
Administrations  since  the  war  have  kept  to  fulfillment  every  letter  in 
our  financial  pledges. 

I  here  insert  a  table  to  sustain  some  of  my  foregoing  statements  : 


Tear. 


Total  interest-bear- 
iii"'  debt. 


Annual  interest 
charge. 


1865,  August  31 

1866,  July  1 . . . . 

1867   

1868   

1869   

1870   

1871  

1872   

1873   ..... 

1874   

1875  

1876   

1877   

1878   

1879  


$2,  381,530, 
2,  332,  331, 
2,  218,  C67, 
2,  202,  088, 
2.  162,  060, 
2,  046,  455, 
1,  034,  696, 
1,  S14,  794, 
1,  710,  483. 
1,  738,  930. 
1.722,  676, 
1,710,685, 
1,711,888, 
1,  794,  735, 
1.  797,  643, 


294  96 
207  60 
387  66 
727  69 
522  39 
722  39 
750  00 
100  00 
950  00 
750  00 
300  00 
450  CO 
500  00 
650  00 
700  00 


8150,  977, 
146,  068. 
138,  892, 
128,  459, 
125.  523, 
118,  784, 
111.  949, 
103,  988, 
98,  049, 
93,  796, 
96,  855, 
95,  104, 
93,  160, 
04,  654, 
83,  773, 


697  87 
196  29 
451  39 
598, 14 
998  34 
960  34 
330  50 
463  00 
804  00 
004  50 
690  50 
269  00 
643  50 
472  50 
778  50 


The  question  which  the  Committee  on  Ways  and  Means  first  met 
was,  whether  the  bonds  contemplated  in  this  bill  could  be  exchanged 
for  the  bonds  to  be  taken  up  if  they  were  to  be  3J  per  cent.  As  the 
bill  provides  for  an  adjustment  of  the  difference  in  interest  from  the 
time  of  the  ottered  exchange  and  maturity,  the  simple  question  was 
whether  the  bonds  of  the  United  States  to  the  amount  of  five  hundred 
millions  could  be  sold  at  par  bearing  3|  per  cent,  interest,  redeemable 
after  twenty  years  and  payable  after  forty.  The  readiness  with  which 
the  4  percent,  bonds  were  sold;  the  eagerness  with  which  the  people 
sought  the  new  4  per  cent,  certificates  of  deposit ;  the  premium  at  which 
the  four  percents  sold;  the  premium  at  which  they  are  now  quoted; 
the  fact  that  these  bonds  are  the  only  ones  which  the  United  States 
can  possibly  put  upon  the  market  before  1891,  and  not  then  unless  a 
war  intervene ;  the  evident  existence  in  the  country  of  large  amounts 
of  trust  funds,  which,  as  experience  has  shown,  seek  permanent  and 
safe  investment ;  the  many  assurances  which  bankers  and  others  com- 
petent to  judge  gave,  brought  the  committee  to  the  opinion  that  no 
higher  rate  of  interest  than  3$  per  cent,  ueed  be  paid. 


6 


It  is  not  certain,  I  admit,  that  these  securities  at  the  rate  of  interest 
fixed  can  be  used  as  we  propose,  nor  was  it  certain  that  the  4  per 
cent,  bonds  could  be  sold.  More  or  as  much  uncertainty  was  felt  then 
as  now.  Certainly  the  four  percents  did  not  absorb  all  the  trust  funds 
in  the  country,  as  was  apparent  when  the  last  sales  were  made.  I 
entertain  the  opinion  that  when  Congress  has  passed  this  bill,  the 
four  percents  will  reach  a  premium  of  9  per  cent,  at  least,  and  then 
investors  can  do  better  by  seeking  the  bonds  which  this  bill  will  pro- 
vide than  any  other  class  of  our  national  securities.  The  bonds  to 
be  issued  are  to  be  offered  in  exchange  for  the  five  and  six  percents 
till  their  maturity,  and  if  the  exchange  is  not  completed  prior  to  the 
maturity  of  the  old  bonds,  then  the  new  bonds  are  to  be  sold  and  the 
proceeds  used  in  the  purchase  of  the  old  bonds  not  exchanged. 

Aside  from  moneys  which  may  be  called  trust  funds,  there  are  large 
amounts  of  money  in  the  country  which  the  owners  thereof  do  not 
care  to  invest  in  active  business  enterprises.  They  are  in  many  in- 
stances persons  who,  retiring  from  business,  seek  investments  which 
shall  be  free  from  needed  supervision  and  consequent  anxiety.  Such 
parties  prefer  a  bond  of  the  Government,  though  it  bear  a  low  rate 
of  interest,  to  any  other  security.  At  no  time  in  our  national  history 
has  our  credit  been  so  good  as  now.  Fidelity  to  pledges,  made  dur- 
ing and  since  the  war,  has  largely  contributed  to  this  result.  This 
credit  was  caused  in  part  by  a  return  to  specie  payments.  Resump- 
tion not  only  was  a  fulfillment  of  money  promises  made  during  the 
war,  but  it  made  the  large  volume  of  paper  money  in  circulation  equiv- 
alent in  commercial  value  to  the  coin  of  the  Constitution.  Resump- 
tion, whether  begun  too  soon  or  too  late,  whether  reached  by  pre- 
cisely the  best  methods  or  not,  could  not  fail  to  strengthen  our  na- 
tional credit,  and  will  not  now,  while  sustained,  fail  to  bring  forward 
for  permanent  and  safe  investment  much  money  which,  if  it  has  not 
been  hoarded,  has  been  employed  in  transactions  but  poorly  remu- 
nerative and  so  employed  till  the  full  credit  of  the  Government  was 
reached. 

While  the  returning  prosperity  in  business  may  keep  in  active  cir- 
culation and  venture  the  great  bulk  of  the  acquired  wealth  of  the 
people,  yet  no  inconsiderable  fraction  of  this  wealth  will  withdraw 
from  hazards  which  prosperity  always  begets  and  seek  security.  In 
the  midst  of  the  wildest  speculations,  there  are  a  few  at  least  who  then 
instinctively  retire  from  business,  and  all  the  more  readily  inquire 
for  a  place  where  they  may  safely  lodge  their  money.  We  should 
not  forget  that  the  value  of  the  annual  productions  of  all  the  indus- 
tries of  the  United  States  is  so  large  that  the  ability  to  invest  in  such 
securities  as  this  bill  contemplates,  is  much  greater  than  we  might 
suppose. 

A  full  year  will  be  given  in  which  the  bonds  provided  for  in  this  bill 
are  to  be  offered  in  exchange  for  the  5  and  6  per  cent,  bonds.  These 
bonds  are  not  to  be  sold  for  money  till  after  the  maturity  of  the  bonds 
to  be  taken  up.  If  this  exchange  cannot  be  effected  by  a  3£  per  cent, 
bond,  it  will  be  in  time  when  Congress  meets  in  December  next  to 
authorize  a  4  per  cent.  bond.  Haste  is  not  needed;  nor  can  it  be 
urged  except  on  the  assumption  that  the  times  are  more  favorable 
now  than  they  will  be  next  year. 

The  questions,  Mr.  Chairman,  which  this  bill  presents  are  not  many, 
and  are  very  simple.  We  have  bonds  maturing  in  1880  and  1881,  bear- 
ing 5  and  C  per  cent,  interest.  Shall  they  remain  to  be  reduced  from 
year  to  year  by  the  surplus  revenues,  which  the  Secretary  of  the 
Treasury  judges  will  be  $50,000,000  each  year  if  there  be  no  unlooked- 


7 


for  changes  and  no  marked  modifications  in  the  revenue  laws  of  the 
country,  or  shall  these  bonds  he  refunded  with  3$  per  cent,  bonds, 
and  the  Government  then  use  the  $50,000,000  in  the  purchase  of  the 
outstanding  4£  per  cent,  bonds,  which  are  redeemable  September  1, 
1891,  and  are  in  amount  $250,000,000  ?  I  do  not  hesitate  to  declare  ray 
opinion  that  the  latter  course  is  the  preferable  one.  The  public-debt 
statement  for  February,  made  March  1,  confirms  me  in  this  opinion.  I 
will  here  make  it  a  part  of  my  remarks.  The  rednction  in  the  public 
debt  for  the  month  of  February,  as  will  be  seen  by  the  official  statement, 
was  over  $5,500,000,  notwithstanding  the  fact  that  over  $0,000,000  were 
paid  out  during  the  month  on  account  of  pensions.  The  total  rev- 
enues during  the  month  were  larger  than  those  ever  received  before 
during  the  month  of  February  under  the  present  revenue  laws.  The 
receipts  from  customs  during  the  month  amounted  to  $10,800,000, 
while  in  the  corresponding  month  of  1879  they  amounted  to  only 
$10,800,000.  The  receipts  from  internal  revenues  last  month  were 
over  $8,750,000  while  in  Februarv,  1879,  they  amounted  to  more  than 
$1,000,000  less. 

The  following  is  the  official  public-debt  statement  for  February  : 
Coin  bonds : 

6  per  cent,  bonds   $203,948,000 

5  per  cent,  bonds   501,  418,  900 

4.J  per  cent,  bonds    250,  000,  000 

4  per  cent,  bonds   738,  962,  000 

Refunding  certificates   1,  883,  950 

Navy  pension  fund   14,  000,  000 

  11,  770,  212,  850 

Debt  bearing  no  interest : 

Debt  on  which  interest  bas  ceased,  (matured)   10,  823, 135 

Legal-tenders   346,  742,  271 

Certificates  of  deposit   11,  485,  000 

Fractional  currency  ■      15,  631, 311 

Gold  and  silver  certificates  =   19,  452,  520 

  393,311,102 

Total   2,  174,  347,  087 

Accrued  interest   17, 116,  787 

Total  debt   2,191,463,874 

Cash  in  Treasury   196,  351,  653 

Debt,  less  cash  in  Treasury   1,  995, 112,  221 

Decrease  during  .February   5,672,019 

Decrease  since  June  30, 1879    32,  095,  035 

Current  liabilities: 

Interest  due  and  unpaid   3,  662,  288 

Debt  on  which  interest  has  ceased   10,  823, 135 

Interest  thereon   897,  003 

Gold  and  siver  certificates   19,  452,  520 

United  States  notes  held  for  redemption  of  certificates  of  deposit. . .  11,  485,  000 

Cash  balance  available  March  1, 1880   150,  031,  706 

Total  liabilities  %   196,  351 ,  653 

Available  assets : 

Cash  in  Treasury   196,  351,  653 

Bonds  issued  to  Pacific  Railroad  Companies,  interest  payable  in 
lawful  money : 

Principal  outstanding   64,  623,  572 

Interest  accrued  and  not  yet  paid   646,  235 

Interest  paid  by  United  States   45,  651,  155 

Interest  repaid  by  transportation  of  mails,  <fec   13,  656,  910 

Balance  of  interest  paid  by  United  States   31,  994, 245 

At  no  time  since  the  foundation  of  the  Government  bas  it  been  free 


8 


from  some  debt.  The  national  debt  January  1,  1791,  was  $75,403,476. 
This  had  a  very  gradual  reduction,  though  increasing  some  years,  till 
January  1, 1812,  when  it  was  $45,209,737.  From  this  point  it  increased 
till  January  1,  1816,  when  it  was  .$127,334,933.  The  revolutionary 
war  was  the  chief  cause  of  the  original  debt,  and  the  war  of  1812  with 
Great  Britain  was  the  cause  of  the  increase.  From  1816  it  decreased 
till  in  1836,  when  it  was  but  $37,513.  From  this  time  it  increased 
till  January  1,  1843,  when  it  became  .$20,601,226 ;  July  1, 1843,  it  was 
$32,742,922;  July  1,  1851,  it  amounted  to  $68,304,796.  This  increase 
is  chargeable  to  the  Mexican  war.  This  debt  was  annually  lessened 
till  1857,  when  it  was  $28,699,831,  and  from  this  year  it  was  annually 
increased  till  July  1,  1861,  when  it  was  $76,455,239.  As  no  part  of 
this  increase  can  be  charged  to  the  war  of  the  rebellion,  there  was  a 
larger  increase  of  the  national  debt  from  1857  to  1861  than  during 
any -similar  period  of  peace  since  the  foundation  of  the  Govern- 
ment. It  is  no  wonder  that  the  war  of  1812  and  the  Mexican  war 
increased  the  public  debt,  and  the  wonder  is  that  they  did  not  make 
larger  increases.  History  does  concede  that  our  financial  affairs  were 
conducted  with  marked  ability  during  these  two  wars.  It  remains 
to  be  seen  what  reasons  history  will  give  for  the  largo  increase  of 
the  public  debt  during  the  administration  of  President  Buchanan. 
From  July  1,  1861,  to  July  1,  1865,  the  debt  increased  from  $76,455,239 
to  $2,756,431,571.  It  is  not  necessary  to  say  that  this  enormous  debt 
was  that  part  of  the  money  expenditure  made  to  preserve  the  Union 
and  which  remained  unpaid  when  the  rebellion  was  brought  to  an 
end.  From  the  close  of  the  war  in  1865  to  this  hour  the  Govern- 
ment has  been  exerting  all  her  energies  so  to  manage  and  reduce 
this  large  debt  that  the  public  credit  might  be  fully  restored  ;  that 
business  might  be  brought  back  to  normal  channels  and  prosperity; 
that  taxation  might  be  reduced  to  the  minimum  of  burden,  and  that 
the  promissory  notes  of  the  Government  made  necessary  by  the  exi- 
gencies of  war,  and  for  that  reason  alone  declared  constitutional,  might 
become,  as  they  now  have,  honest  representatives  of  the  promised  gold 
and  silver  of  the  Constitution. 

I  insist,  Mr.  Chairman,  that  the  Government  during  this  period  has 
achieved  great  financial  success.  The  interest-bearing  debt  has  been 
reduced  from  $2,381,530,294  to  $1,770,212,850,  or  $611,317,444.  If  we 
add  to  this  the  aggregate  amount  of  interest-money  paid  since  July 
1,  1865,  which  has  amounted  to  $1,703,595,985,  we  shall  have  $2,319,- 
913,429  as  the  sum  total  paid  on  the  debt  and  interest  on  the  debt. 
When  we  consider  that  we  have  paid  $1,708,595,985  of  interest,  while 
we  have  reduced  the  principal  but  $611,317,444,  we  shall  see  no  beauty 
in  a  national  debt,  but  find  in  it  the  certain  elements  of  a  grievous 
burden.  Should  we  add  to  the  $2,319,913,429 — the  aggregate  debt 
reduction  and  interest  paid — the  net  ordinary  expenditures  of  the 
Government  for  the  same  peiiod,  which  have  been  $3,299,9-21,125, 
aside  from  the  interest  on  the  public  debt,  we  have  $5,619,834,654  as 
the  sum  total  of  our  expenditures  during  these  fifteen  years.  These 
figures  should  warn  against  policies  tending  to  perpetuate  this  vast 
burden.  They  should  rather  impel  us  to  measures  calculated  annu- 
ally to  reduce  the  burden  and  end  it  within  the  least  possible  period 
of  "time.  To  the  consummation  of  this  great  good  every  party  and 
every  section  should  struggle. 

Though  the  bonded  debt  has  had  a  reasonable  reduction,  yet  the 
reduction  in  the  annual  interest  charge  has  been  very  great.  As  al- 
ready stated,  it  has  fallen  from  $150,977,697  to  $83,773,778  on  July  1, 
1879,  and  if  this  bill  should  pass  and  go  into  full  execution  the  annual 


0 


1873    $2, 105,  462,  060  75 

1874    2, 104,  149,  153  69 

1875    2.  090,  041,  170  13 

1876    2,  060,  925,  340  25 

1877    2,  019,  275,  431  37 

1878    1,  999,  382,  280  45 

1879    1, 996,  414,  905  03 


interest  charge  will  be  but  $68,163,881.  This  fact  in  our  financial  sit- 
uation is  full  of  promise;  it  isa  just  causeof  congratulation ;  and  it  has, 
in  part,  been  secured  by  refunding  operations.  The  secured  credit 
of  the  Government,  its  honesty,  its  fidelity  to  promises  made  during 
and  since  the  war,  have  conspired  to  this  grand  result.  The  people 
have  sustained  these  measures  and  policies.  They  will  continue  to 
do  so,  no  matter  how  loudly  the  few  may  complain  and  however  se- 
verely the  few  may  criticise.  The  people  love  good  results.  They 
care  less  about  methods,  provided  they  are  honest,  and  nothing  about 
the  theories  of  pretenders  in  finance. 

The  Government  has  a  small  debt  besides  the  bonded  debt.  I  will 
not  stop  to  enumerate  the  items,  but  here  insert  the  following  table, 
which  will  show  the  aggregate  debt  each  year  since  1865,  interest- 
bearing  and  non-interest-bearing,  less  cash  in  the  Treasury  : 

1865,  August  31  $2,  756,  431,  571  43 

1866,  July  1   2,  636,  036, 163  84 

1867    2,  508, 151,  211  69 

1868    2,  480,  853,  413  23 

1869    2,  432,  771,  873  09 

1870    2,  331,  169,  956  21 

1871    2,  246,  994,  068  67 

1872    2, 149,  780,  530  35 

The  cash  in  the  Treasury  July  1,  1879,  was  $249,030,167.  It  has 
been  stated  in  this  debate  that  the  bonded  debt  increased  in  1878 
about  $83,000,000  over  the  debt  in  1877.  That  is  true ;  but  it  is  very 
proper  to  state  the  reasons.  Bonds  to  this  amount  were  issued  for 
resumption  purposes.  This  issue  did  increase  the  bonded  debt,  but 
the  money  received  for  the  bonds  was  put  into  the  Treasury,  and 
there  remains.  Whether  all  this  cash  should  now  be  kept  in  the 
Treasury  to  give  security  to  resumption  is  not  a  question  which  this 
bill  suggests  or  one  which.  I  deem  it  necessary  to  consider.  It  is,  how- 
ever, my  opinion  that  some  of  this  cash  could  be  used  in  payment  of 
a  portion  of  the  maturing  bonds  for  which  this  bill  makes  provision 
and  in  no  manner  endanger  resumption.  How  much  of  it  could  be 
so  used,  I  am  not  prepared  to' say.  Not  enough  of  it  should  be  re- 
moved to  put  in  the  least  jeopardy  the  end  for  which  it  was  put 
there.  The  business  prosperity  of  the  country  which  now  makes  glad 
every  portion  of  it,  should  not  have  the  least  check.  The  slightest 
shadow  of  danger  in  this  direction  would  work  an  injury  which  five 
times  the  cash  in  the  Treasury  could  not  mend. 

Let  me  here  ask  atrentiou  to  the  fifth  section  of  the  bill  under  con- 
sideration. It  provides  that  from  and  after  the  1st  day  of  July, 
1880,  the  31  per  cent,  bonds,  authorized  by  the  first  section  of  the 
bill  shall  be  the  only  bonds  receivable  as  security  for  national-bank 
circulation.  The  amount  of  bonds  on  deposit  with  the  Treasurer  of 
the  United  States  to  secure  the  circulation  of  national  banks  at  the 
close  of  business  March  9, 1880,  was  s362,*43:050.  Of  this,  $132,518,000 
are  four  percents,  payable  in  1907,  and  $37,316,950  in  four-and-a-half 
percents,  payable  in  1891.  Tbe  balance  consists  of  five  and  six  per- 
cents. For  the  redemption  of  these  and  others  of  like  denomination, 
this  bill  is  now  before  us.  When  the  three-and-a-half  percents  con- 
templated by  this  bill  shall  take  the  place  of  the  five  and  six  percents 
now  held  by  the  banks,  the  annual  interest  on  the  bonds  which  will 
then  be  held  by  tbe  banks,  if  remaining  the  same  in  amount,  will  be 
$12,735,266. 

The  national  banks  in  1871  paid  national  aud  State  taxes  to  the 
amount  of  $18,509,973,  and  in  1877,  $15,731,877.  For  the  last  two 
years  they  have  paid  not  less  than  in  1877.    These  figures  disclose  the 


10 


interesting  fact  that  while  these  bonds  held  by  the  national  banks  give 
complete  security  for  every  dollar  issued  by  the  banks,  the  banks  them- 
selves actually  pay  out  in  the  shape  of  taxes  an  amount  larger  than 
the  interest  on  the  bonds.  When  we  consider  this  fact,  we  shall  see 
the  extreme  folly  of  withdrawing  the  national-bank  notes  which  are 
taxable,  and  putting  in  their  place  Treasury  notes  which  are  not  tax- 
able. This  folly  will  appear  all  the  more  supreme  when  we  reflect 
that  the  Government  must  pay  the  interest  on  all  its  outstanding 
bonds,  whether  held  by  the  banks  or  by  private  parties. 

The  history  of  the  loans  of  the  United  States  from  177G  is  instruct- 
ive as  well  as  interesting.  The  loans  authorized  by  the  Continental 
Congress  amounted  to  $49,000,000,  but  the  amount  received  was  only 
$8,536,517.  The  rate  of  interest  was  5  per  cent,  and  in  one  instance 
4  per  cent.  The  securities  sold  at  par.  The  loans  negotiated  in 
Holland  from  1790  to  1794  were  5  per  cent.,  and  the  securities  sold  at  an 
average  of  ninety-six  cents.  During  the  next  rive  years  other  small  6 
per  cent,  loans  were  effected  at  par.  In  1795  a  A\  per  cent,  loan  was 
negotiated  at  par ;  in  1800  an  8  per  cent,  loan  was  authorized,  the 
notes  selling  at  a  very  small  premium.  The  securities  which  were 
issued  during  the  next  twelve  years  were  6  per  cent.,  and  sold  at  par. 
Those  negotiated  in  1814  were  6  per  cent.,  and  sold  at  eighty  cents. 
The  first  bonds  of  the  Government  which  were  sold  for  more  than 
one  cent  premium  were  authorized  in  1*48,  bearing  6  per  cent,  inter- 
est, payable  quarterly  or  semi-annually.  The  bonds  sold  at  a  pre- 
mium of  three  and  one-half  cents.  Those  issued  between  1848  and 
1861  were  generally  6  percent.,  selling  at  par.  The  securities  issued  by 
the  Government  up  to  1861  were  largely  denominated  Treasury  notes, 
stocks,  certificates,  and  stock  certificates.  The  aggregate  amount  re- 
ceived on  all  loans  from  1776  to  1861  was  but  $509,074,402.  If  we  con- 
sider that  the  revolutionary  war,  the  Indian  wars,  the  war  of  1812, 
and  the  Mexican  war  were  all  carried  on  during  this  period,  we  shall 
wonder  at  the  inexpensiveness  of  the  earlier  governmental  operations. 
The  fathers  were  economical,  and  when  a  debt  was  incurred  they 
made  haste  to  reduce  it.  They  had  no  arguments  in  favor  of  a  per- 
petual national  debt.  They  were  known  to  the  world  as  opposed  to 
such  a  policy.  We  have  not  departed  from  their  lessons,  and  I  trust 
we  never  shall. 

When  the  war  of  the  rebellion  was  ended,  the  Government  at  once 
commenced  the  reduction  of  the  debt  which  it  had  been  compelled 
to  create.  Its  achievements  I  have  already  stated.  The  reduction 
has  gone  on  from  year  to  year.  The  people  will  not  forget  it,  and  will 
not  forgive  the  party  in  power  which  fails  to  continue  the  reduction. 

If  the  bill  before  us  becomes  a  law  and  the  bonds  can  be  disposed 
of,  the  bonded  debt  of  the  Government  will  be  as  follows :  $250,000,000 
of  four-and-one-half  percents,  redeemable  September  1,  1891 ;  $740,- 
845,950  four  percents,  redeemable  July  1, 1907  ;  $500,000,000  three-and- 
one-half  percents,  redeemable  in  1900  ;  and  $200,000,000  of  Treasury 
notes,  3|  per  cent.,  redeemable  in  two  years  and  payable  in  ten ; 
and  $50,000,000  of  certificates  of  deposit/  These  five  great  classes  of 
bonds  will  constitute  our  debt.  The  interest  upon  these,  as  already 
stated,  will  be  $68,183,881,  while  the  interest  upon  the  bonded  debt 
at  the  close  of  the  war  was  8150,977,617. 

Mr.  Chairman,  thus  far  in  what  I  have  said  I  have  spoken  from  no 
partisan  stand-point.  I  did  not  suppose  the  discussion  on  this  bill 
would  be  partisan  in  its  character.  I  could  not  anticipate  any  reason 
why  it  should  take  that  turn.  It  is  a  simple  business  proposition  for 
the  Government  of  the  United  States  to  entertain.    The  discussion  of 


11 


this  question,  legitimately  conducted,  does  not  go  back  of  the  present 
hour.  It  has  no  business  with  anything  except  the  simple,  naked 
proposition  whether  or  not  we  shall  make  provision  for  these  matur- 
ing bonds  ;  and,  if  we  are  to  make  provision  for  them,  how,  or  in 
what  manner,  at  what  rate  of  interest,  and  for  how  long  a  time.  If 
we  are  to  make  no  provision  for  them,  as  the  eloquent  gentleman 
from  Georgia  [Mr.  Felton]  suggests,  then  it  is  for  us  to  canvass  care- 
fully, if  we  legislate  wisely,  the  revenues  we  are  to  have  or  how  much 
money  we  shall  have  with  which  to  take  care  of  these  maturing 
bonds. 

I  have  said  in  the  remarks  which  I  have  already  made  that  there 
is  no  party  in  this  country  that  asks  for  the  perpetuation  of  the  pub- 
lic debt.  The  policy  of  the  party  to  which  I  belong,  has  been  against 
it  from  the  time  that  it  took  hold  of  the  Government.  Not  a  session 
has  been  held  since  the  close  of  the  war,  in  which  a  reduction  of  the 
national  debt  has  not  been  in  contemplation.  I  am  glad  that  the 
democratic  side  of  the  House  favors  the  reduction  of  the  national 
debt.  I  am  heartily  glad  of  it.  Only  I  say,  Mr.  Chairman,  let  that 
reduction  be  made  by  honest  methods. 

The  gentleman  from  Texas  [Mr.  Mills]  says  he  takes  it  for  granted 
that  during  the  next  ten  years  we  shall  have  such  and  such  revenues. 
Is  it  wise  to  legislate  on  mere  assumptions  ?  Is  it  wise  for  me  to  give 
a  vote  to-day  on  an  assumption  that  for  ten  years  to  come  the  reve- 
nues are  to  be  what  they  are  to-day  ?  Certainly  not.  The  views  of 
the  gentleman  from  New  York  [Mr.  Fernando  Wood]  do  not  har- 
monize with  that  line  of  argument.  We  are  to  meet  the  question 
like  business  men.  Shall  we  let  these  bonds  run  on  at  6  and  5  per 
cent,  and  take  the  chances  of  reducing  the  volume  or  paying  them  in 
full,  or  shall  we  put  them  into  bonds  bearing  a  lower  rate  of  interest  ? 
Suppose  we  have  sixty-one  millions  of  surplus  revenues,  as  the  gen- 
tleman from  Texas  says ;  that  we  have  refunded  these  bonds ;  it  will 
not  deny  us  the  privilege  of  using  those  sixty-one  millions  in  the  pur- 
chase of  outstanding  4}  per  cent,  bonds.  We  can  use  every  dollar  of 
surplus  revenues  in  the  reduction  of  our  bonded  debt  just  as  well  if 
this  quantity  now  under  contemplation  be  put  into  three-and-a-half 
percents  as  though  we  allowed  that  portion  to  run  on  at  5  and  6  per 
cent. 

The  gentleman  from  Texas  has  talked  about  the  debt  of  Great 
Britain.  There  is  no  advocate  here  of  British  policy  on  this  floor. 
There  is  no  man  inside  of  the  republican  party  that  has  ever  declared 
a  national  debt  a  national  blessing.  There  is  nothing  in  our  history 
that  should  educate  the  people  of  this  generation  into  a  national-debt 
theory.  Our  forefathers  were  wonderful  men.  No  sooner  had  the 
revolutionary  war  closed  than  they  commenced  the  reduction  of  their 
debt ;  and  no  matter  what  administration  has  been  in  power,  the  re- 
duction of  the  existing  debt  has  been  one  of  our  crowning  national 
virtues.  It  has  entered  into  our  national  history,  and  England  to-day 
in  her  best  journals  and  in  the  strongest  language  commends  to  the 
world  the  financial  history  and  the  financial  record  of  the  United 
States  of  America.  The  republican  party  has  no  record  in  conflict 
with  our  national  history.  It  has  proudly  presented  its  financial 
record  to  the  people  and  they  have  indorsed  it.  We  do  not  avoid  the 
fullest  investigation  ;  we  are  for  an  honest  administration  of  the  Gov- 
ernment and  the  annual  reduction  of  the  national  debt. 

We  have  had,  Mr.  Chairman,  all  along  in  our  national  history 
able  men  at  the  head  of  the  Treasury—  Hamilton  and  Gallatin  and 
Rash  


12 


Mr.  HAWLEY.    Wolcott,  of  Connecticut. 

Mr.  DUNNELL.  And  Walker,  who  managed  our  finances  during 
the  Mexican  war  with  consummate  ability;  and  since  him  Guthrie 
and  Chase.  History  always  sets  things  right.  I  am  not  called  upon 
to  defend  any  man.  But  when  the  history  of  the  present  times  shall 
he  written  by  a  thoughtful  posterity,  the  name  of  John  Sherman  will 
be  found  among  the  names  of  these  great  Secretaries  of  the  Treasury. 

I  say  this  not  as  a  republican,  for  I  do  not  think  it  is  necessary  to 
discuss  the  question  from  that  stand-point.  The  gentleman  from 
Texas  [Mr.  Mills]  has  referred  to  the  English  debt.  I  agree  with 
him  that  the  English  debt  has  borne  down  and  is  bearing  down  the 
English  people.  We  want  no  such  burden  upon  the  energies  of  the 
American  people.  But  the  gentleman  made  one  singular  statement, 
that  it  is  the  business  of  governments  in  time  of  peace  to  hoard  money 
for  the  time  of  war. 

Mr.  MILLS.  No,  sir.  I  said  ancient  governments  did  it,  and  I  con- 
demn it. 

Mr.  DUNNELL.    I  did  not  hear  the  condemnation  come  in. 

Mr.  MILLS.  I  said  it  was  wrong  and  reprehensible,  but  that  it  was 
better  than  the  funding  system. 

Mr.  DUNNELL.  Mr.  Chairman,  I  do  not  believe  this  Republic  will 
ever  adopt  the  policy  of  hoarding  money  in  the  time  of  peace  for  a 
time  of  war. 

Mr.  MILLS.    And  it  ought  not. 

Mr.  DUNNELL.  War  ought  not  to  enter  into  our  governmental 
policy.  When  war  comes,  where,  Mr.  Chairman,  should  be  our  strength 
in  this  countrv  ? 

Mr.  WEAVER.    In  the  greenback. 

Mr.  DLTNNELL.  Where  is  our  strength  to  day  in  the  world  ?  It 
is  in  our  grand  credit.  It  is  in  our  credit,  Mr.  Chairman,  which  to  us 
is  not  only  a  pillar  of  strength  but  a  source  of  great  national  glory. 
The  gentleman  from  Iowa  [Mr.  Weaver]  says:  "  In  the  greenback." 
Why  was  there  strength  in  the  greenback  ?  Because  it  was  the  promise 
of  a  government  which  was  entitled  to  public  credit,  because  it  was 
issued  for  the  public  defense  and  for  that  end  authorized  by  the  Con- 
stitution, and  declared  constitutional  by  the  Supreme  Court  of  the 
United  States. 

But  a  word  more  and  I  will  close.  I  admired  the  eloquent  language 
of  the  gentleman  from  Georgia,  [Mr.  Feltox,]  language  that  did  his 
heart  and  head  much  credit.  He  says:  Let  us  stand  by  the  national 
debt  to  its  full  payment — let  us  stand  by  all  the  pledges  of  the  Gov- 
ernment in  letter  and  spirit.  He  pleads  for  the  extinction  of  this 
debt.  So  do  I.  He  follows  one  line  in  reaching  the  grand  result,  and 
I  follow  another.  Now,  if  I  were  certain,  Mr.  Chairman,  that  our 
revenues  would  enable  us  to  take  care  of  these  maturing  bonds  within 
two,  three,  or  four  years,  I  would  let  them  stand  uuref unded  and  take 
care  of  them  by  degrees.  But  it  is  demonstrable  that  it  is  better  to 
refund  these  bonds  at  a  3i  per  cent,  rate,  and  then  use  the  fifty  millions 
which  the  Secretary  thinks  we  may  have  in  decreasing  the  funded 
debt,  in  the  purchase  of  other  outstanding  bonds;  that  we  shall  use 
the  money  to  better  account  after  the  refunding  processes  have  been 
entered  into,  than  to  let  these  bonds  remaiu  at  their  present  high  rate 
of  interest  and  attempt  their  extinction  by  the  surplus  revenues. 

I  have  said  that  I  thought  some  of  the  cash  in  the  Treasury  might 
be  used  ;  I  do  not  know  whether  it  could  or  not.  It  is  very  easy  to 
make  declarations  here  and  to  give  opinions.  I  cannot  say  just  what 
percentage  of  the  present  volume  of  money  in  the  Treasury  is  needed 


13 


to  keep  resumption  safe.  The  gentleman  from  New  York  would  not 
hazard  resumption  in  the  slightest  degree.  Yet  that  matter,  it  was 
agreed  in  the  committee,  should  come  before  the  House  in  a  separate 
bill.  Therefore  I  have  said  that  resumption  was  not  necessarily  con- 
nected with  or  involved  in  a  legitimate  discussion  of  this  bill. 

I  will  not  longer  occupy  the  time,  further  than  to  say  that  in  my 
opinion  we  have  great  reason,  as  the  representatives  of  the  people,  to 
congratulate  them  upon  the  present  financial  outlook.  We  have  a 
restored  credit ;  we  have  returning  prosperity  ;  we  have  our  debt  in 
such  a  shape  that  we  can  grapple  it  and  handle  it.  The  burden  by 
way  of  annual  taxation  has  been  so  much  reduced  that  the  debt  has 
largely  ceased  to  be  the  burden  which  it  was  soon  after  the  war. 

I  believe  that  in  legislation  it  is  better  to  cling  to  the  existing  con- 
dition of  things  than  to  legislate  under  anticipated  adverse  condi- 
tions. The  gentleman  from  Texas  is  full  of  fear.  Foreboding  has 
taken  possession  of  him.  He  is  considering  with  a  great  deal  of  anx- 
iety the  posterities  that  are  to  follow  him.  ■  If  we  can  pay  $50,000,000 
annually  upon  our  national  debt,  as  he  says  we  can,  the  gentleman 
from  Texas,  if  he  lives  to  the  ordinary  period  of  human  life,  will  see 
this  debt  completely  wiped  out.  I  hope  and  expect  to  live  to  see  the 
consummation  of  the  grand  result.  The  gentleman  from  Pennsylva- 
nia [Mr.  Kelley]  says  it  will  be  done  in  fifteen  years  or  less.  If  our 
surplus  revenues  in  the  years  immediately  to  come  shall  be  .$50,000,000 
with  a  Congress  in  session  each  year  to  tell  the  Secretary  what  to  do 
with  those  funds,  how  are  we  to  be  damaged  because  of  those  sur- 
plus revenues  ?  We  can  order  him  to  dispose  of  them  in  the  purchase 
of  outstanding  bonds.  We  run  no  risk  by  this  legislation.  We  do 
not  put  off  a  day  the  final  extinguishment  of  the  national  debt.  We 
shall  save  $15,000,000  a  year  in  interest  money  if  this  bill  passes  and 
is  put  into  successful  operation.  Adding  this  saving  to  the  $50,000,000 
which  the  gentleman  says  we  shall  have,  we  have  $65,000,000.  Let 
that  $65,000,000  do  its  work  year  by  year,  and  the  gentleman  from 
Texas  may  think  less  of  posterity  and  look  forward  to  the  day  when 
he  can  raise  his  voice  in  a  grand  acclaim,  in  a  national  thanksgiving 
that  the  great  debt  which  the  salvation  of  the  Union  made  necessary 
has  been  extinguished  by  the  generation  that  saw  it  created. 


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